In 2014, national spending on health care products and services totaled $3.1 trillion, or $9,695 per person, and accounted for 17.4 percent of our gross domestic product (GDP). Medicaid enrollment grew by 12.9 percent in 2014, while spending on the program grew by 12 percent (federal and state spending grew 17.7 percent and 3.4 percent, respectively) totaling $503.3 billion and accounting for 16.3 percent of national health expenditures (NHE). Average spending per beneficiary in Medicaid was 1.4 times greater than spending on individuals with private health insurance. The chart below provides insight into where that money is going: a large share of the nation’s spending on nursing and retirement care, home health care, and other residential and community-based services are paid for by Medicaid.
The Medicare Trustees issued their annual report detailing the financial state of America’s entitlement programs. The report echoed past conclusions: Medicare and Social Security are still going bankrupt. At its current pace, Medicare will be bankrupt in 2030 and Social Security will go bankrupt in 2034 (a year later than last year’s projection). Despite what many will herald as good news for Medicare, a deeper look at the data proves just how broken our current entitlement programs are.
Medicare Advantage (MA) offers seniors a one-stop option for hospital care, outpatient physician visits, and prescription drug coverage. MA is popular; enrollment has increased every year since 2004 and reached 16 million individuals in 2014, which represents 30 percent of the Medicare population. Since 2008 MA plan performance has been rated on a 5-star scale to inform beneficiaries of the quality of plan options, and since 2012 plans with higher ratings receive bonuses that are in part returned to beneficiaries.
As the nation marks the 50th Anniversary of the creation of Medicare and Medicaid, it is important to both look back at how the programs have evolved, as well as forward at what’s to come. But be careful—the trajectory may alarm you. Between 2010 and 2023, total expenditures on Medicare and Medicaid will more than double to nearly $2 trillion annually, while enrollment during that same period is only expected to increase by 45 percent. Spending on Medicare did not surpass $500 billion until 2009, 44 years after the program began; but it will only take 13 years beyond that to increase by the same amount. In the 10 years between 2014 and 2023, average annual enrollment growth in both Medicare and Medicaid will be approximately 3 percent, while average annual growth in expenditures will be more than double the rate of enrollment for both programs—6.2 percent for Medicaid and 7 percent for Medicare.
Medicaid, along with Medicare, was created in 1965 as a joint federal-state entitlement program to provide health care coverage to any low-income individual or individual with disabilities who meets the eligibility criteria in his or her state of residence. The Federal government sets minimum eligibility criteria and program requirements which can be expanded by the state, and funds anywhere from 50 percent to 74 percent of a state’s Medicaid expenses, based on the Federal Medical Assistance Percentage (FMAP) formula. Every state has participated in the program since 1982.
When the Affordable Care Act (ACA) was signed into law, it included a mandatory expansion of Medicaid to cover individuals up to 138 percent of the federal poverty level (FPL). The Supreme Court ruled, however, that this was an unconstitutional coercion of the states by the federal government, thereby making the Medicaid expansion voluntary.
For years, policymakers and health insurers have looked for ways to simultaneously reduce federal health care expenditures and ensure better quality care for patients. For both hospital services (Part A) and physician services (Part B), the Centers for Medicare and Medicaid Services (CMS) has implemented multiple programs to track providers’ performance on various metrics and adjust payments accordingly—similar to efforts being imposed by private insurers. For Medicare Advantage (MA or Part C), CMS operates the Star Rating System. This system provides a relative quality score to Medicare Advantage Organizations (MAOs) on a 5-star scale based on their plans’ performance on selected criteria, and is now used to determine whether or not an MAO will receive bonus payments and/or rebates for their enrollees.
Everything, seemingly, has been sold as creating jobs or “stimulus.” So it should hardly be surprising that over the past year several studies have claimed that the Affordable Care Act's (ACA) Medicaid expansion will create new jobs and economic activity. By implication, states that decline the expansion are needlessly forgoing jobs and economic growth that could be obtained at no cost. T
Medicaid is the combined federal-state health insurance program for low-income Americans. It is also a centerpiece of Obamacare's coverage expansions, a questionable choice in light of the program’s history of limited access to actual health care by its beneficiaries.
Medicaid expansions have been central to the already-tortured history of the Affordable Care Act (ACA); aka Obamacare. As originally signed by President Obama, the ACA required all states to expand Medicaid.
Congress is faced with the decision to reauthorize the Export-Import Bank (Ex-Im). Ex-Im is an export credit agency (ECA) that provides insurance, direct loans, and loan guarantees to facilitate export transactions. Its reauthorization has already become a political flashpoint, in part because Ex-Im is easily demagogued.
In 1990 Congress created the Medicaid Drug Rebate Program, a variant of price fixing that imposed a ceiling on the manufacturers’ price when provided to Medicaid patients. Specifically, manufacturers were required to offer Medicaid the ‘best price’ offered to any other health insurance provider. The price-fixing, however, had a serious catch. Before the law passed, manufacturers regularly donated prescription drugs to health care facilities with high volumes of low-income patients (in return they got a charitable deduction and some good-will). Continuing this practice, however, would mean that the Medicaid best prices was……zero. Charitable giving collapsed.
The president will announce today executive actions to reduce the repayment obligations of student loan borrowers. According to the New York Times: "Mr. Obama’s main action will be to expand on a 2010 law that capped borrowers’ repayments at 10 percent of their monthly income. The intent is to extend such relief to an estimated five million people with older loans who are currently ineligible — those who got loans before October 2007 or stopped borrowing by October 2011. But the relief would not be available until December 2015...”
Few sectors of the American economy can rival the public distress caused by the high cost of health care, but higher education comes close.
During an April 10th Senate Finance Committee hearing, Department of Health and Human Services (HHS) Secretary Kathleen Sebelius informed committee members that some states may see cuts to Medicaid funding. According to Secretary Sebelius, some states are unable to receive Medicaid applications from the federally facilitated exchange (FFE), and are left sifting through applications for individuals awaiting their Medicaid eligibility approval.